Question 1

Disclosure information under IAS 24 is aggregated by:

Accepted Answer

A) forex currency base, size of the transaction and class of related party. 
B) size of the transaction, type of transaction and frequency of the transaction. 
C) type of transaction, nature of terms and conditions and class of related party. 
D) nature of terms and conditions, class of related party and frequency of the transaction. 
A) forex currency base, size of the transaction and class of related party. 
B) size of the transaction, type of transaction and frequency of the transaction. 
C) type of transaction, nature of terms and conditions and class of related party. 
D) nature of terms and conditions, class of related party and frequency of the transaction. C

Question 2

The following diagram shows three companies and their associated equity ownership percentages.Which of the companies shown would most likely be considered related entities?

Accepted Answer

A) F and G, and G and H are related parties. 
B) F and G, G and H, and F and H are related parties. 
C) Only G and H are related parties. 
D) Only F and H are related parties. 
A) F and G, and G and H are related parties. 
B) F and G, G and H, and F and H are related parties. 
C) Only G and H are related parties. 
D) Only F and H are related parties. B

Question 3

An alternate director who is not acting in that capacity is considered a related party in IAS 24.

Accepted Answer

A) True 
 B)False  True

Question 4

IAS 24 requires an entity to disclose total compensation of key management personnel.What items are included in key management personnel's remuneration/compensation?

Accepted Answer

Although the defined term 'compensation'

Question 5

A frequently applied practice in relation to the disclosure of related-party transactions of directors is to:

Accepted Answer

A) make a general statement that there were some transactions. 
B) not report that there were any transactions. 
C) state that the transaction is at arm's length terms and conditions. 
D) specify the number, nature and amount of the transactions with comparisons to arm's length transactions of a similar nature and type. 
A) make a general statement that there were some transactions. 
B) not report that there were any transactions. 
C) state that the transaction is at arm's length terms and conditions. 
D) specify the number, nature and amount of the transactions with comparisons to arm's length transactions of a similar nature and type.

Question 6

IAS 24 defines control as:

Accepted Answer

A) the exercise of power to direct the decision making of another entity in relation to financial and operational decisions so as to enable the controlling entity to benefit as a result. 
B) the capacity to influence the financial and operational decision making of another entity through the board of directors so as to achieve the co-operation of the other entity in obtaining the ends of the controlling entity. 
C) the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. 
D) the potential ability to obtain desired outcomes through another entity by influence through representatives on the governing board of the other entity. 
A) the exercise of power to direct the decision making of another entity in relation to financial and operational decisions so as to enable the controlling entity to benefit as a result. 
B) the capacity to influence the financial and operational decision making of another entity through the board of directors so as to achieve the co-operation of the other entity in obtaining the ends of the controlling entity. 
C) the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. 
D) the potential ability to obtain desired outcomes through another entity by influence through representatives on the governing board of the other entity.

Question 7

Entities included in a wholly owned group as defined by IAS 24 include:

Accepted Answer

A) entities that have an equity ownership of 20 per cent or greater in an entity that is a subsidiary of an entity that is wholly owned by a party related to the reporting entity. 
B) entities that are an associate or joint venture of the other entity. 
C) entities that are controlled or have significant influence exercised over them by an entity that is wholly owned by a related party of the reporting entity. 
D) subsidiary companies that are wholly owned by a parent company. 
A) entities that have an equity ownership of 20 per cent or greater in an entity that is a subsidiary of an entity that is wholly owned by a party related to the reporting entity. 
B) entities that are an associate or joint venture of the other entity. 
C) entities that are controlled or have significant influence exercised over them by an entity that is wholly owned by a related party of the reporting entity. 
D) subsidiary companies that are wholly owned by a parent company.

Question 8

If there had been a related-party transaction during the period,the disclosures required by IAS 24 director-related entities include:

Accepted Answer

A) annual income in aggregate amount and the number in £10 000 bands. 
B) retirement benefits. 
C) aggregate number of shares, units, options and other equity instruments acquired and disposed of, by issuing entity and class of share, unit, option or equity instrument. 
D) their names. 
A) annual income in aggregate amount and the number in £10 000 bands. 
B) retirement benefits. 
C) aggregate number of shares, units, options and other equity instruments acquired and disposed of, by issuing entity and class of share, unit, option or equity instrument. 
D) their names.

Question 9

The commentary to IAS 24 identifies factors that would normally indicate the existence of control.These factors include:

Accepted Answer

A) the capacity to withdraw a material amount of loan capital. 
B) the power to dominate the composition of the board of directors or governing body. 
C) the authority to determine the outcome of significant local council decisions relevant to the entity. 
D) the capacity to withdraw a material amount of loan capital and the power to dominate the composition of the board of directors or governing body. 
A) the capacity to withdraw a material amount of loan capital. 
B) the power to dominate the composition of the board of directors or governing body. 
C) the authority to determine the outcome of significant local council decisions relevant to the entity. 
D) the capacity to withdraw a material amount of loan capital and the power to dominate the composition of the board of directors or governing body.

Question 10

Tests to indicate whether significant influence exits include:

Accepted Answer

A) participating in decisions on the distribution or retention of the associate's profits. 
B) the ability to dominate the decision making of the board of directors. 
C) the extent of ownership interest between the entities. 
D) participating in decisions on the distribution or retention of the associate's profits and the extent of ownership interest between the entities. 
A) participating in decisions on the distribution or retention of the associate's profits. 
B) the ability to dominate the decision making of the board of directors. 
C) the extent of ownership interest between the entities. 
D) participating in decisions on the distribution or retention of the associate's profits and the extent of ownership interest between the entities.

Question 11

Transactions involving related parties cannot be presumed to be carried out on an arm's length basis.

Accepted Answer

A) True 
 B)False

Question 12

What is the rationale for disclosing related-party transactions with key management personnel regardless of its materiality?

Accepted Answer

Key management personnel are considered

Question 13

The disclosures that IAS 24 requires for other related parties are:

Accepted Answer

A) limited to the aggregate amount, nature and type of transaction. 
B) largely the same as the disclosure requirements for directors of the entity. 
C) fairly consistent with the requirements for the wholly owned group. 
D) limited to the nature and terms and conditions of each different type of transaction. 
A) limited to the aggregate amount, nature and type of transaction. 
B) largely the same as the disclosure requirements for directors of the entity. 
C) fairly consistent with the requirements for the wholly owned group. 
D) limited to the nature and terms and conditions of each different type of transaction.

Question 14

Transactions with and amounts receivable from or payable to a key management person and their related parties are excluded from additional disclosures when:

Accepted Answer

A) the transactions occur within a normal employee, customer or supplier relationship on terms and conditions no more favourable than those that it is reasonable to expect the entity would have adopted if dealing with an unrelated person. 
B) the information about them does not have a potential to affect adversely decisions about the allocation of scarce resources made by the users of the financial report, or the discharge of accountability by the key management person. 
C) these are trivial or domestic in nature. 
D) All of the given answers are correct. 
A) the transactions occur within a normal employee, customer or supplier relationship on terms and conditions no more favourable than those that it is reasonable to expect the entity would have adopted if dealing with an unrelated person. 
B) the information about them does not have a potential to affect adversely decisions about the allocation of scarce resources made by the users of the financial report, or the discharge of accountability by the key management person. 
C) these are trivial or domestic in nature. 
D) All of the given answers are correct.

Question 15

Which of the following disclosures on key management personnel is/are required in IAS 24 for disclosing entities?

Accepted Answer

A) name of the person 
B) position held 
C) qualification(s) of the person 
D) name of the person and position held 
A) name of the person 
B) position held 
C) qualification(s) of the person 
D) name of the person and position held

Question 16

The disclosure requirements of IAS 24 include:

Accepted Answer

A) disclosure of the fair value of a transaction with a related party. 
B) restatement of the transaction to its fair value in the accounts of the entity. 
C) comparative transactions with non-related parties to form a basis for a fair value assessment by users of the accounts. 
D) none of the given answers. 
A) disclosure of the fair value of a transaction with a related party. 
B) restatement of the transaction to its fair value in the accounts of the entity. 
C) comparative transactions with non-related parties to form a basis for a fair value assessment by users of the accounts. 
D) none of the given answers.

Question 17

Which of the following statements is correct?

Accepted Answer

A) A related-party transaction is a transfer of resources, services or obligations between related parties that is not at arm's length. 
B) The existence of a related-party transaction can expose an entity to risks or opportunities that otherwise would not have existed in the absence of the relationship. 
C) Related parties include organisations that are under the control or significant influence of the entity and individuals such as key management personnel and their close family members. 
D) The existence of a related-party transaction can expose an entity to risks or opportunities that otherwise would not have existed in the absence of the relationship, and related parties include organisations that are under the control or significant influence of the entity and individuals such as key management personnel and their close family members. 
A) A related-party transaction is a transfer of resources, services or obligations between related parties that is not at arm's length. 
B) The existence of a related-party transaction can expose an entity to risks or opportunities that otherwise would not have existed in the absence of the relationship. 
C) Related parties include organisations that are under the control or significant influence of the entity and individuals such as key management personnel and their close family members. 
D) The existence of a related-party transaction can expose an entity to risks or opportunities that otherwise would not have existed in the absence of the relationship, and related parties include organisations that are under the control or significant influence of the entity and individuals such as key management personnel and their close family members.

Question 18

A major supplier with whom an entity transacts a significant volume of business is considered a related party in IAS 24 Related Party Disclosures.

Accepted Answer

A) True 
 B)False

Question 19

Cobourg Plc has following transactions during the year: $$\begin{array} { | l | l | } 
\hline \mathrm { I } & \text { Sells goods to its parent entity at cost } \
\hline \text { II } & \text { Sells goods to its subsidiary at recommended retail price } \
\hline \text { III } & \text { Director is reimbursed his air ticket to attend a board meeting } \
\hline \text { IV } & \begin{array} { l } 
\text { Director's home renovation costs paid by the entity in exchange for interest } \
\text { bearing loan at market rates }
\end{array} \
\hline \mathrm { V } & \text { Dividends paid to key management personnel as a shareholder of the entity } \
\hline \mathrm { VI } & \text { Retirement of key management personnel } \
\hline
\end{array}$$ Which of the following lists all the related-party transactions required to be disclosed in IAS 24 Related Party Disclosures?

Accepted Answer

A) I and II 
B) III and IV 
C) II, IV and V 
D) I, II, IV and VI 
A) I and II 
B) III and IV 
C) II, IV and V 
D) I, II, IV and VI

Question 20

A related party relationship can affect the profit and loss of an entity.

Accepted Answer

A) True 
 B)False

Exam 18: Related-Party Disclosures

Disclosure information under IAS 24 is aggregated by:

The following diagram shows three companies and their associated equity ownership percentages.Which of the companies shown would most likely be considered related entities?

An alternate director who is not acting in that capacity is considered a related party in IAS 24.

IAS 24 requires an entity to disclose total compensation of key management personnel.What items are included in key management personnel's remuneration/compensation?

A frequently applied practice in relation to the disclosure of related-party transactions of directors is to:

IAS 24 defines control as:

Entities included in a wholly owned group as defined by IAS 24 include:

If there had been a related-party transaction during the period,the disclosures required by IAS 24 director-related entities include:

The commentary to IAS 24 identifies factors that would normally indicate the existence of control.These factors include:

Tests to indicate whether significant influence exits include:

Transactions involving related parties cannot be presumed to be carried out on an arm's length basis.

What is the rationale for disclosing related-party transactions with key management personnel regardless of its materiality?

The disclosures that IAS 24 requires for other related parties are:

Transactions with and amounts receivable from or payable to a key management person and their related parties are excluded from additional disclosures when:

Which of the following disclosures on key management personnel is/are required in IAS 24 for disclosing entities?

The disclosure requirements of IAS 24 include:

Which of the following statements is correct?

A major supplier with whom an entity transacts a significant volume of business is considered a related party in IAS 24 Related Party Disclosures.

A related party relationship can affect the profit and loss of an entity.

An Overview of the International External Reporting Environment

The Conceptual Framework of Accounting and Its Relevance to Financial Reporting

Theories of Financial Accounting

An Overview of Accounting for Assets

Depreciation of Property, Plant and Equipment

Revaluations and Impairment Testing of Non-Current Assets

Inventory

Accounting for Intangibles

An Overview of Accounting for Liabilities

Accounting for Leases

Share Capital, Reserves and Share Options Employee Bonus Schemes

Accounting for Financial Instruments

Revenue Recognition Issues

The Statement of Comprehensive Income and Statement of Changes in Equity

Accounting for Income Taxes

The Statement of Cash Flows

Events Occurring After the Reporting Date

Earnings Per Share

Further Consolidation Issues I: Accounting for Intragroup Transactions

Further Consolidation Issues II: Accounting for Non-Controlling Interests

Further Consolidation Issues III: Accounting for Indirect Ownership Interest

Accounting for Foreign Currency Transactions

Translating the Financial Statements of Foreign Operations

Accounting for Corporate Social Responsibility

Filters